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Biotech / Medical : Watson Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: Dan'l Leviton who wrote (72)	3/29/1998 7:12:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 83

Re: Dilacor is easily company's most important product: Dilacor is a calcium channel blocker, which is a class of blood pressure medications that is going out of favor. Basically, they are more expensive than the older classes of drugs. Worse than that, in spite of a huge research effort, no drug in this class has been shown to increase lifespan, or decrease mortality. A big advertising effort is propping up sales of these drugs, but a consensus conference has clearly stated that calcium channel blockers should not be first-line therapy. When the market corrects, when the drug industry cycles out of favor, when Dilacor sales dissapoint, then WPI will be available at a PE of 14 again, and I'll buy it again. I'm prepared to be very patient. I spend most of my investing time watching and doing nothing, and this is my most profitable activity.

To: Dan'l Leviton who wrote (72)	9/13/1999 9:30:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 83

The buying criteria I stated in my 1/1/98 and 1/4/98 posts are close to being met, so I'm now watching the stock closely. I bought in 5/97 at (split-adjusted) 18, sold in January 1998 at 33.5 (when I thought the stock was overvalued). Then I watched it run up, and watched it run down. We are now back down to the valuation levels at which this is a safe stock to buy, with little downside risk. My patience has been rewarded, and the manic-depressive Mr. Market is giving me another chance to buy a great company cheaply. The trailing PE is now 20 (= 33/1.61). The very worst I could see happening is a PE of 15, the bottom of its 5-year range: 1.61 X 15 = 24. I still don't really understand why a company with such a predictable earnings growth record, stable management, good new drug pipeline, and excellent balance sheet, should have such a volatile stock. But I'm quite happy to take advantage of it. Repost from 1/4/98: I said I'd buy back if: Assuming the fundamentals don't change (no debt, steady EPS and revenue growth, steady expansion of non-commodity product line), I will begin looking again when the stock hits a PE of 20. Then, I will watch till it forms a base lasting at least a month, bouncing off a support level two or three times, and then buy. In 3 of the last 4 years, the stock bottomed at a PE of 14 or 15 (using trailing earnings). It is an unusually volatile stock, given its steady earnings history. For the last 13 quarters, the EPS have been 17,18,20,23,23,24,25,26,26,28,31. Meanwhile, the stock has gone from 10 to 25 to 13 to 23 to16 to 34. I would have been happy continuing to hold this stock, but I want the money for KLAC and BSX. Those stocks have prospects at least as good as WPI, but they are out of favor, and will easily triple in the next three years, from their current low valuations. From current levels, I would expect WPI (the stock) to grow only as fast as its EPS does. There is little room for PE expansion. I like to buy stocks when both the PE and EPS have potential for growing. Actually, I still hold it, because my limit sell price of 33.5 hasn't been reached. If it doesn't sell in the next few days, I'll convert it to a market sell order, as long as I get at least 30.